Morning Bell: Paulson’s Part of the Problem

Before he became Treasury secretary, Hank Paulson firmly believed the government had no business interfering in financial markets by banning the short selling of financial stocks. But by mid-September of this year, while Lehman Brothers was on the verge of collapse, Paulson pressured the Securities and Exchange Commission to ban short selling. In today’s Washington Post, Paulson remembers saying at the time, “Whatever we are doing right now isn’t working, so go ahead and do it.”

When no one knows how the rules of the game are going to change — and they seem to change from week to week — who wants to take a risk? Who wants to borrow money? Who wants to invest? Business and consumers are hunkering down, waiting for the storm of change to pass.

Join The Discussion

Banks are not lending because the fear and uncertainty Mr. Paulson has placed in the marketplace. Together, Bernake and Paulson have created such fear, uncertainty, and schizophrenic behavior that markets are frozen. They use words such as dire, failing, worsening economy, to justify their own poor and erratic decisions.

On Mr. Paulson, people forget that he is a Democrat that President Bush appointed to his position to show a new tone. Paulson's mission during the election was to provide the October surprise, which he did. The economy totally tanking is also what Obama wants as he needs our country in a major crisis to have the people totally open to fascism, a form of socialism coupled with totalitarianism on a national scope instead of worldwide as Marx planned it, and eventually, around 2012, the suspension of elections which will make him president for life on the Hugo Chavez model. Remember that Obama's buddy, Bill Ayres, is a member of a Hugo Chavez think tank and probably has a direct link to the dictator. I certainly hope that you don't consider the truth or an opinion based on the truth a personal attack or conservatism is dead because we are up against an ideology that will fight anyway it can to win. The evidence is this last election.

How can he 'get away' with using that money for items(he desires) that are not what the money was specified for?

Wasn't the big priority to be to help 'MAIN STREET'people to keep their homes, etc, etc, and the housing market troubles at grassroots level?

And please… WHY CANNOT WE TAXPAYERS find out who — exactly WHO is getting each penny and DEMAND PAULSON ADHERE TO SPEND THE MONEY AS IT WAS TO BE SPENT. I would like to see a list of who has received what.

We need an investigation and prosecution of Paulson BEFORE THE MONEY IS ABSOLUTELY GONE. THAT'S NOW!

The crux (an essential point requiring resolution or resolving)of this crisis was gambling by all on ever climbing real estate values. Take a step back and common sense dictates a correction then needs be made in the collateral.

In September I wrote the following to Jim Cramer and then candidate McCain:

An alternative to the $700 billion bailout: Pick a date – early 2005, and require the write down of all 1st and 2nd mortgages and home equity loans originating from that date forward by 30%. (Corresponding insurances including the credit default swaps associated with them would be similarly adjusted.)

The results:

1) Corrects over-inflated housing prices.

2) Keeps worthy borrowers in their homes.

3) Puts more money in homeowners pockets of all stripes and thereby the economy.

4)Doesn't use taxpayer funding for a bailout.

Since congress now wants to let the bankruptcy system write down the principal on mortgages for the troubled, and in many cases speculators, a move which is a slap in the face to other borrowers and deflates their equity anyway, would the imposed correction I proposed earlier not have saved alot of time, money, angst and perhaps… Lehman, AIG and the like?

let the lord of chaos rule. guess the wheel has turned after all. our fight starts now when they stick him in the high seat. we know what obama is and he has said what he will do.deal with it and be ready his opening moves will come soon enough. i love a country not an empire. i do not require it to be perfect to love it or defend it so please lay off this cant we all just get along. socialists dont work like that they feast on fools who do. they want peace and the peace of the grave for enemies. read your history if it hasnt been altered. failing that read animal farm and when you look at demos – rinos you will see pigs wearing clothes and walking on thier hind legs and none of them will do time for thier crimes.sure glad they took down the mob or did they assume thier tactics and evolve into them.

I think Paulson is a good man but the problem seemed to be beyond him. First he needed the full 750 billion to buy the toxic mortages. Now, there is money left over. Plus, some of that money is going to credit and student loan firms. I still believe that it makes good economic sense to infuse liquidity to the banks, guarantee account holders a higher amount (250,000 – which was a wise move)and zero out corporate taxes and capital gaines taxes for at least two years. The public trough must close immediately. Taxpayers are over burdened.

The problem with the so-called bailout is that it is fundamentally a fascist scheme. It places dictatorial authority in one government official. That Paulsen is distorting the market should come as no surprise. The scheme itself offers no alternative. And now Congress is considering another scheme ostensibly to help the UAW. Oh, excuse me, the auto industry. With Obama soon to assume power, it will get only worse. Whether the American free market economy can survive is looking more dubious.

George Soros. I know what George you want me to say, because like most Democrats that what you want Americans to believe. I’m not one of them. I know to place the blame and who is responsible for this crisis. Democrats saw McCain’s numbers rise in the polls with the addition of Sarah Palin and they had to do something. Soros to the rescue. I have no doubt this socialist felon came up with the plan. This is how this jerk made his money, destroying countries economies. He can put his money behind every low life liberal that crawls out from under a rock, who believes they can run the government, opps sorry let me change that… It’s not run, it should be ruled. Was it just a coincidence that our economy tanked the day the democrats came back from “vacation”? Sorry, I don’t believe in coincidences, especially in politics or from a democratically controlled lying scumbags Congress. Sorry to all the scumbags.

How was he ever able to become an American citizen? He’s a convicted felon. He was tried and convicted for his sleazy practice of manipulating the stock market and insider trading in France. He appealed and the court upheld his conviction. He fled before he would serve any jail time. I believe that makes him illegible to become a US citizen. Why is he even here? If he’s not US citizen, then why are we allowing him to destroy our Country, by using the Democratic Party?

A continent without sufficient energy production which in turn stifles jobs creation is called AFRICA. Obama was born in Kenya so we will, in a few years, look exactly like Kenya. Now just exactly what else would you expect dummies?

Regardless of punctuation and capitalization where appropriate, Mike is right. We have just begun to FEEL the effects of socialism simply because democrats shoved capitalism and free enterprise, along with our constitution, under the rug years ago. Now we are seeing, as that moron Maxine Waters states, the socializing(nationalizing) of our American companies! America as we knew her, especially back in the 50's, is dead and gone! My family did not even have a key to the house so it was never locked and of course you left your car keys in your car so you always knew where they were. Bikes in the yard? They would be there the next morning, and every morning. Then the liberals came along, like Obama and "changed" everything. Gee, thanks a lot libs. Why don't you go ruin some other country and leave us(US) the hell alone?!

Paulson and his boss GW are taking this country down the road to financial ruin that B. Hussein and his Dem toadies hope to take advantage of by socializing the problem. Be afraid . . . be very afraid and alert.

That B. Hussein believes in the garbage in garbage out computer schematic global warming trends is no surprise. It is another one of his ways of making us feel the pain he promised.

I feel sorry for the people that depend on coal fueled electric generating plants in the northern climes after he bankrupts the coal industry like he promised. I wonder how many of them voted for him and if they will be regretting that vote with very cold hands and feet. Like Jimmy Carter, B. Hussein contends that you will just have to layer while suffering.

How ironic that where ever the Grand Poobah of America's global warming movement went to speak last winter record cold temperatures followed him. Maybe God was trying to tell him something about his treachery. If so Al Gore wasn't listening.

I'v written an interesting piece on global warming that I took from one of William O and Kathleen Gears "Peoples of . . .' books. This is 'People of The Nightland' that takes place along the ice-caps in southern Ontario, northern New York and Pennsylvania about 14,000 years ago

It was a time we experienced a mini global warming phenomena that wreaked cataclysmic affects for the paleo-Indians. This was followed by another iceage as cyclic climate change always does. Their Foreward and Afterword followup is eye opening if people dare to pay attention, keep an open mind and check out.

Without buying the bad debt you create a big problem. First if you have homes that go in to foreclosure in the same block it brings down the price of all the houses in that same block. So if you want to sell your house it is worth less than before.

Next problem is the taxes on the home, they also drop, causing a shortfall for cities across the country. Congress needs to wake up.

If homeowners are to take out bankruptcy the auto dealers need to take it out too. Why should we pay taxes to bail them out. Those who borrowed too much money are not being bailed out. This goes without saying the banks need to stand on their own too.

I believe many of the "conservative" ideas which are based upon an economic argument are very attractive, however the social values based discussion does not further the conservative agenda. Bigotry, the racism based Southern Strategy and dependence on right to lifers has thankfully lost its fear based grip on voters.

I wish the conservatives would turn to economic reasoning rather than fear mongering to cast their agenda.

All this talk is good, where is the money going to come from??????? It will be on the backs of the working family trying to make ends meet.Obama is going to see this country straight into a socialist country, or into bankruptcy, which ever come first. I am really glad that so many people have been so easily led by the sliver tongue of the democrats.

None of our so called elite government people representing us have any idea what the problem is and all they know how to do is spend billions on Pork Barrel crap until it has broken the back of America. The Wall Street Futures and Speculation Sales men and women were taken out of the commodity business with S-3134 and in two weeks were absolutely out of business. They have been raping us with high oil prices for years and everyone of us Americans were cussing OPEC when they were not complaining but appreciated our Wall Street guys for keeping crude oil up high like they wanted it to stay, using Futures Selling with Speculation methods for making big bucks for the oil companies and their stock holders. It is over now and crude oil has already dropped and so has our gasoline, kerosene Jet Fuel and Diesel Fuel for our trucks.

One thing still wrong,we as a country are running afraid now and are not spending and our government still thinks things will start moving with their big tax dollar giveaway.

If they had a brain, they would recognize that we have money to spend but will not until they get thing straightened out, if ever. At this point, the only one I trust is Jesus Christ.

Why should we have the bail out shoved down our throats and be led to believe we like it? I for one fear for the future of my country. I don't agree with anythng bHo and his new vision for our country stand for. BTW– where is his proof of citizenship? Why won't he provide a valid non doctored Birth certificate? If he hasn't anyhing to hide why won't he prove he was born here not Kenya? How come he doesn't have to provide an amount he spent on tailor made suites he wore while campaigning to ruin our country? How come we can't find out who funded his abroad trips as a young college student? There is just too many unanswered questions about this Kenyan born, Indoniasian raised, unamerican who wants to change our country….

I have been following the bailouts since October and if my question has already been addressed, I apologize. I haven't seen it answered elsewhere, but I am new to this forum.

What I don't understand is how will we taxpayers be expected to pay this massive debt? Will we each be assessed an amount of money on our income tax in addition to what we now pay? If we are in one percentage bracket, will we somehow be "bumped up" to the next? I just can't grasp how we will have to pay this, yet I know we will somehow have to do so.

Also — doesn't President-elect Obama have the discretionary power to replace Paulson? I think he must — so will whomever he picks likely just be given a pass since Republicans no longer have much clout on the Hill?

Excellent article, this is why I enjoy the Heritage Foundation and why you play such an important role. Doesn't the "Peter Principle" apply here? I initially supported Hank Paulson but I now must admit he also doesn't have a clue in how to fix our financial crisis. I'd say we are in quite a dilemma, nobody has a viable solution. What would I do? Last week was my answer….get in your car, drive to Seattle, catch breakfast at Lowell's, cheer on a good football game, then hit the road via 101 through Oregon & California. Catch the Seafood Chapino for dinner at The Tadich Grill in San Franscisco, then head south to Los Angeles. The Corn Beef Hash at the Beverly Hills Hotel is beyond description. After all that, just head home & enjoy the rest of your life…come on folks, it's not that bad out there!

[…] Earlier this week we documented how Treasury Secretary Hank Paulson’s erratic behavior has become perhaps the single most disruptive force in the global economy. But he is just one of many government actors throwing more uncertainty into an already volatile […]

[…] Morning Bell: Paulson’s Part of the Problem » The Foundry He fled before he would serve any jail time. I believe that makes him illegible to become a US citizen. Why is he even here? If he’s not US citizen, then why are we allowing him to destroy our Country, by using the Democratic Party? … […]

If some 10% or less of monthly mortgage payments are NOT being paid, then some 90% or more of monthly mortgage payments ARE being paid and must be going to the mortgage holders. This must be a huge amount of money each month, in the order of the bailout amounts! And available to finance loans. Why is there no mention of this fountain flow of dollars?? Or am I the only one still paying my monthly mortgage payment??

[…] management of the Troubled Asset Relief Program which undermined the rule of law, destroyed market confidence, and led to the nationalization of America’s largest automobile manufacturer. Did anyone in […]

[…] management of the Troubled Asset Relief Program which undermined the rule of law, destroyed market confidence, and led to the nationalization of America’s largest automobile manufacturer. Did anyone in […]

[…] are paying-back those funds, and American taxpayers will get every single dime they are owed. But TARP has long since devolved from a one-time emergency action into a crony-capitalist political slush fund. TARP will lose […]

[…] are paying-back those funds, and American taxpayers will get every single dime they are owed. But TARP has long since devolved from a one-time emergency action into a crony-capitalist political slush fund. TARP will lose […]

[…] passage was just how quickly our worst fears were realized. The TARP plan, as sold to Congress, was never even implemented and, instead, it quickly devolved into a political slush fund. Because of the broad delegations of […]

[…] There is no person more central to Washington’s bailouts of Wall Street than Treasury Secretary Timothy Geithner. As President of the Federal Reserve Bank of New York, he oversaw the federal bailout of Bear Stearns and under former Treasury Secretary Hank Paulson, Getihner designed the original bailout plan for the American International Group (AIG). As Treasury Secretary, Geithner has enthusiastically assumed full authority over the $700 billion TARP fund first secured by Paulson under President Bush and he has continued to wield it in the same haphazard manner as his predecessor. […]

Don’t have time to read the Washington Post or New York Times? Then get The Morning Bell, an early morning edition of the day’s most important political news, conservative commentary and original reporting from a team committed to following the truth no matter where it leads.

Email address

Ever feel like the only difference between the New York Times and Washington Post is the name? We do. Try the Morning Bell and get the day’s most important news and commentary from a team committed to the truth in formats that respect your time…and your intelligence.